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Page 1: Taken together, four key themes emerging from this year’sregional-institute.buffalo.edu/wp-content/uploads/sites/... · 2014-06-26 · Taken together, four key themes emerging from
Page 2: Taken together, four key themes emerging from this year’sregional-institute.buffalo.edu/wp-content/uploads/sites/... · 2014-06-26 · Taken together, four key themes emerging from

Taken together, four key themes emerging from this year’s Report Card on Charitable Giving in Erie Countysend mixed signals about giving and the health of our nonprofit sector, continuing a trend observed in pastreports:

This report addresses these key themes. It also highlights significant short- and long-term trends, inanswering the following questions relating to philanthropy in this region:

We extend our sincere gratitude and appreciation for the continued participation, time and effort of thisyear’s 60 participating bellwethers. We are also grateful to the following groups with whom we intend towork collaboratively in an effort to distribute the Report Card widely and facilitate learning and action:

• The Association of Fundraising Professionals, Western New York Chapter• Leave a LegacyTM

• Western New York Grantmakers Association• Western New York Planned Giving Consortium

Thank you for your interest in philanthropy and charitable giving as well as the long-term sustainability ofour vital nonprofit sector in Erie County. Our organizations have been pleased to work together on thispublication and will continue to explore ways in which we can collaborate to facilitate action that resultsfrom this report.

Sincerely,

AArrlleennee KKaauukkuuss, PresidentUnited Way of Buffalo & Erie County

JJeerreemmyy MM.. JJaaccoobbss,, JJrr.., Chair, Board of Directors United Way of Buffalo & Erie County

GGaaiill JJoohhnnssttoonnee, President/CEOCommunity Foundation for Greater Buffalo, Inc.

RRoobbeerrtt DD.. GGiiooiiaa, Chair, Board of Directors Community Foundation for Greater Buffalo, Inc.

Total direct public contributions to Erie County bellwethers reached a five-yearhigh in 2004, but did not keep pace with inflation.

Overall giving trends masked uneven experiences for bellwethers categorized bysector, with nearly as many individual bellwethers seeing declines as gains incharitable giving.

Current fiscal and operational challenges were revealed in communications withbellwether CEOs in 2005.

In 2004 significantly more bellwethers had responded to trends in giving bytaking cost-cutting and revenue-enhancing measures, as compared to 2003.

key themes

short- and long-term

trends

What are our sources of charitable donations? How much do we give, and towhich bellwethers?

How are these trends consistent with prior years and/or national trends, and howdo they differ?

How have bellwethers responded to trends in giving?

How can these findings inform a strategy that addresses the most critical issueschallenging this region’s nonprofit sector?

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I. Executive Summary

II. Process

III. Main Themes for 2004

IV. 2004 Key Findings Consistent with Prior Years and National Trends

V. 2004 Findings Differing from Prior Years and National Trends

VI. Responses to Trends

VII. For the Future

1

3

8

10

13

16

19

Table o f Contents

Cover photo credit: Ballet Dancers – Bruce Fox/Chautauqua Institution

In cooperation with:Association of Fundraising Professionals, Western New York Chapter

Leave a Legacy™

Western New York Grantmakers Association

Western New York Planned Giving Consortium

Researched and produced by:

Institute for Local Governance and Regional GrowthUniversity at BuffaloThe State University of New York

GIV

ING

C

HA

RIT

AB

LE

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11 Report Card on Charitable Giving in Erie County

I . Execut ive Summar y

This Report Card, the fourth in a series released since 2002, documents charitable giving

in Erie County. Data cover the five years from 2000 through 2004 as reported by 60

bellwether nonprofit organizations representing five nonprofit service sectors (Arts &

Culture, Education, Environment-Animals, Health, and Human Services) and one

nonprofit funder category (Public Funding Organizations). Funding challenges at the

time of the survey, conducted in summer 2005, prevented two of the study’s 62 original

bellwethers from participating; data for prior years have been adjusted to ensure

comparability.

Total direct public contributions to Erie County’s 60 participating bellwethers totaled $174.8

million in 2004, representing a 1.7 percent increase from 2003 and 1.6 percent since 2000. The

increase did not keep pace with inflation, which was 3.5 percent between 2003 and 2004 and

11.6 percent between 2000 and 2004. It also trailed national gains of 5.0 percent from 2003 to

2004 and 8.0 percent from 2000 to 2004 (Section III-1).

Giving impact was mixed. Slightly more than half of Erie County’s bellwethers—32 of 60—

reported increased donations in 2004 relative to 2003, with the remainder receiving the same or

a decreased level of contributions. Over one-third of bellwethers had lower contributions in

2004 than in 2000 (Section III-2).

Consistent with prior years and national patterns, individual donors were the largest source of

giving, accounting for over half (53 percent) of total contributions to bellwethers. Individual

giving levels were up 10.3 percent since 2003, outpacing the 4 percent comparable national

increase. Most individual donations to Erie County bellwethers came in small amounts, with

over 75 percent of 337,000 individual donations in 2004 under $100 (Section IV-2).

Despite a slight 2 percent increase between 2003 and 2004 in bequest gifts (a subset of

individual donations), bequest gift levels to Erie County bellwethers were down 29 percent

since 2000 in contrast to stable national levels (Section V-3).

Businesses accounted for 19 percent of total contributions to Erie County bellwethers in 2004.

Business giving was up 75 percent since 2000, far outpacing the comparable national increase of

12 percent. Foundation donations, which accounted for 16 percent of contributions, were down

in 2004, but remained up 21 percent since 2000, a pace exceeding national levels (Section V-2).

The report highlights key themes for 2004, short- and long-term trends since 2000 andrelevant national comparisons. Among the findings:

key

fin

din

gs

Charitable Giving

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22Report Card on Charitable Giving in Erie County

Over forty percent of bellwethers identified individual donations as their single top

fundraising priority over the next 12 months (Section VI-4).

Half of bellwethers reported that reductions in charitable giving or government funding

in 2004 negatively affected service capacity and clients. One-third of bellwethers

offered fewer program services and over one-third made layoffs (Section VI-2). Fewer

clients received services and some had longer waits (Section VI-1).

Bellwethers pursued a multi-pronged approach to giving trends. Greater collaboration

was the most frequently cited cost-containment measure, while increased fundraising,

cited by 56 percent of bellwethers, was the most common revenue-enhancing response

(Section VI-2).

The percentage of bellwethers taking some active response to adapt to trends in giving

was up sharply, from 60 percent in 2003 to 98 percent in 2004 (Section VI-2).

Unseen in the data for 2004 in this report are significant ongoing challenges for Erie

County nonprofits. Bellwethers reported that lack of funding, personnel cuts and

reorganizations in 2005 made completing this year’s survey more difficult than in the

past and prevented two original bellwethers from participating. Continuing fiscal and

operational challenges raise critical issues and questions. These questions require

dialogue, collaboration and action at various levels—individual agencies, the six

nonprofit sectors, the entire nonprofit community and the broader community as a

whole. With action at every level, the future of our nonprofit community can be focused

and self directed rather than one that simply happens.

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3 Report Card on Charitable Giving in Erie County

Scope. Because two of the original bellwethers could not participate this year, the 2004

Report Card draws on charitable giving data from 60

bellwether organizations in Erie County. Like the broader

nonprofit community, the bellwethers vary in size, mission

and organizational structure. Collectively they represent a

cross-section of the nonprofit community across six

philanthropic sectors: Arts & Culture; Education;Environment-Animals; Health; Human Services; and

Public Funding Organizations. These bellwethers

received the bulk of total philanthropic gifts to these six

nonprofit sectors in Erie County.

This year’s report covers five years of data from 2000 to

2004. Unlike prior years, data from 1998 and 1999 have

been omitted to highlight the effects of (and potential

recovery from) the significant factors that influenced levels

of local charitable giving and demand for nonprofit

services from 2000 to 2004. These factors include a major

stock market decline between 2000 and 2002, the impact of

events of September 11, 2001, and a local government

funding crisis in recent years.

Collecting the data. A survey solicited data on philanthropic

trends, including total direct public donations as reported on the Internal Revenue

Service Form 990, as well as the

sources and uses of these

donations. The survey also

solicited bellwethers’ responses

to current levels of giving, the

impacts on clients of cutbacks

in government funding and

anticipated sources for

additional funding. Data on

national trends for 2004 came

from the 2005 Giving USA

report, an annual national-level

report published by the

American Association of

Fundraising Counsel (AAFRC)

Trust for Philanthropy.

I I . P rocess

African American Cultural Center

Buffalo and Erie County Historical Society

Buffalo Fine Arts Academy – Albright-Knox Art Gallery

Buffalo Philharmonic Orchestra Society

El Museo

Hallwalls

just buffalo literary center

Pick of the Crop Dance

Shea’s Performing Arts Center

Studio Arena Theatre

Western New York Public Broadcasting Association

Arts & Culture (11)

Buffalo & Erie County Public Library Foundation

Buffalo Prep

Buffalo Seminary

Buffalo State College

Canisius College

The Gow School

King Urban Life Center

Nichols School of Buffalo

St. Mary’s School for the Deaf

University at Buffalo

Education (10)

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4Report Card on Charitable Giving in Erie County

To improve the efficiency of the

data collection process, this

year’s survey was

separated into two parts –

one to be completed by the

bellwether chief executive

officer and the other by the

bellwether board chair.

The CEO survey provided

most of the data, including

all fiscal data and other

information on trends in

giving and bellwether

responses to these trends.

The shorter board chair survey addressed issues of board governance and strategies for

the future. Bellwethers could complete the survey online via a web-based interface.

Nine bellwethers completed the survey online.

The survey was distributed to bellwethers in mid May 2005 with a request for

completion by August 1, 2005. Response by this deadline was unusually low, perhaps

due to the economic and operational difficulties experienced by many bellwethers, but

by late September 2005 there were 60 completed surveys. Two of the original

bellwethers, the American Lung Association of Western New York and the YWCA of

Greater Buffalo, were unable to participate this year. Unlike past years, the Buffalo and

Erie County Library submitted data for its Library Foundation only, rather than both the

Library itself and Foundation as separate

entities. Consequent adjustments to the

data are described in Analyzing the Data

below.

Based on the unusually low survey

response rate by the August 1 deadline,

14 bellwether executives were contacted

to obtain insights on their organization’s

greatest challenges, opportunities and

information needs in an uncertain current

funding environment. Findings from

these calls inform this year’s Report Card.

Analyzing the Data. Analyses of charitable

giving relied on data collected from this

year’s and previous surveys. Data are

reported in the aggregate and, when

Buffalo Olmsted Parks Conservancy

Buffalo Society of Natural Sciences- Buffalo Museum of Science (including Tifft Farm Nature Preserve)

Erie County Society for the Prevention of Cruelty to Animals

Hamburg Natural History Center

Hawk Creek Wildlife Center

Zoological Society of Buffalo

Environment-Animals (6)

AIDS Community Services of Western New York

American Red Cross, Greater Buffalo Chapter

Buffalo Hearing and Speech Center

Catholic Health System

Children’s Hospital of Buffalo Foundation

Hauptman-Woodward Medical Research Institute

Hospice Buffalo

Kaleida Health System

Elizabeth Pierce Olmsted, MD Center for the Visually Impaired

Roswell Park Cancer Institute

Health (10)

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5 Report Card on Charitable Giving in Erie County

appropriate for a closer look, disaggregated by bellwether

sector. Because of the dominance of large bellwethersand the small sample size by sector, trends may reflectthe experience of a single large bellwether having anexceptional year. The report notes when this appears to be

the case.

To ensure comparability of findings to earlier report cards,

data for prior years were adjusted to exclude data for the

bellwethers that were unable to participate this year. Prior

years’ data were also adjusted for one bellwether that had

misreported contributions that flowed between its service-

providing arm and foundation.

Data in this report also reflect a change in reporting by the

United Way of Buffalo and Erie County—a change that has

been implemented over the past five years—to exclude

donations from individuals residing outside Erie County

who are employed by local businesses and who have

earmarked their donations for organizations located

outside Erie County.

This year’s report excludes an analysis of bellwether

revenues. The change recognizes the complexity of

comparing revenues between distinct types of bellwethers.

For example, some bellwethers are foundations, whose

primary goal is to raise funds, while others are service

providing organizations that sustain their mission through

fundraising conducted on their own or through support from other fundraising and

grantmaking organizations. Moreover, variation in the ways bellwethers define and

report revenues make

comparisons

problematic, even within

bellwether sectors.

Recognizing significant

variation in bellwether

purpose and structure as

well as considerable flux

in the nonprofit

community, this year’s

report foregoes much

detail contained in last

year’s report to highlight

Boys and Girls Clubs of Buffalo & Erie County

Boy Scouts (Greater Niagara Frontier Council)

Buffalo Urban League

Child and Family Services

City Mission

Cradle Beach Camp

Food Bank of Western New York

Girl Scouts of Buffalo & Erie County

Harvest House

Hispanics United of Buffalo

Hopevale

International Institute

Meals on Wheels of Buffalo & Erie County

Mental Health Association of Erie County

Native American Community Services

Planned Parenthood of Buffalo & Erie County

YMCA of Greater Buffalo

Human Services (17)

Arts Council in Buffalo & Erie County

Community Foundation for Greater Buffalo, Inc.

Foundation for Jewish Philanthropies

Jewish Federation of Greater Buffalo

United Way of Buffalo & Erie County

United Way of the Tonawandas

Public Funding Organizations (6)

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6Report Card on Charitable Giving in Erie County

short- and long-term themes. The report also points out significant consistencies and

peculiarities of Erie County bellwethers over time and relative to their national

counterparts. Finally, the report takes advantage of a special survey of bellwether CEOs

and board chairs to forecast the road ahead for nonprofits responding to a challenging

funding environment.

Assumptions. This Report Card

assumes that contributions to

Erie County’s nonprofit

bellwethers come primarily

from sources in the eight

counties of Western New York

(Allegany, Cattaraugus,

Chautauqua, Erie, Genesee,

Niagara, Orleans, Wyoming).

However, a spot check

revealed that many

bellwethers do seek and have

successfully obtained

donations from outside the

region. To the extent that this

report’s assumption does not

hold—that is, that significant

donations come from sources

beyond the region—the

findings overstate region-

based support of Erie County’s

nonprofit sector even though

they are an accurate gauge of

total direct public support to

Erie County’s bellwethers.

DefinitionsBelow are definitions of key terms used within this report.

Direct public contributions - Grants or gifts madedirectly and voluntarily to an organization byindividuals, businesses, foundations or other entitiesfor which the donor does not receive any goods orservices from the recipient. Total direct publiccontributions are reported on Line 1a of Form 990.

Government funding - Grants from a government

agency to an organization, the primary purpose ofwhich is to enable the organization to directlybenefit the public. Governmental contributions arereported on Line 1c of Form 990.

Capital contributions - Contributions made by

individuals, businesses, foundations and otherentities that are restricted for capital projects and notavailable for an organization’s general operations.

Bequests - Contributions made through a will.

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C H A R I T A B

L E G I V I N G

G I V I N G C H

A R I T A B L E

G I V I N G C H

A R I T A B L E

G I V I N G C H

A R I T A B L E

G I V I N G C H

A R I T A B L E

I V I N G G I V

I N G G I V I N

77 Report Card on Charitable Giving in Erie County

GIV

ING

INE

RIE

CO

UN

TY

CH

AR

ITA

BLE

Four key themes

send mixed signals about

G I V I N Gand the health of our nonprofit sector

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88Report Card on Charitable Giving in Erie County

I I I . Main Themes for 2004

1. Total direct public contributions reached a five-year high, but did not keep pace with inflation.

Total direct public contributions to Erie County’s bellwethers reached a five-year high of $174.8million in 2004. This was up a slight 1.7 percent from 2003 (and 1.6 percent from 2000) andrepresented a 14 percent rebound from the 2002 low of $154 million (Chart 1).

This trend mirrored the direction of nationalcharitable giving trends, which also reached a highin 2004. However, it did not keep pace withinflation, which was 3.5 percent between 2003 and2004 and 11.6 percent between 2000 and 2004.1 Italso trailed the national rate of recovery, which hasbeen more robust, with charitable donationsincreasing 5 percent from 2003 and 8 percent from2000.

2. Overall trends masked uneven patterns ofgiving for individual bellwethers and bellwethersgrouped by sector.

Although total direct contributions to the collectivegroup of bellwethers registered a net gain between2003 and 2004, nearly half of the individualbellwethers—28 of 60—reported a decrease or nochange in their total direct public contributionsbetween 2003 and 2004 (Chart 2). Among these 28,contributions to five bellwethers dropped below theReport Card’s minimum threshold requirement forparticipation, namely, $150,000 in contributionsover three years. Between 2000 and 2004, 22bellwethers saw a decrease in contributions, while37 reported an increase and one bellwetherexperienced no change.

These mixed experiences by individual bellwetherstranslated into mixed experiences by bellwethersgrouped by sector, trends elaborated later in thisreport. Overall, four philanthropic sectors–Arts &Culture, Environment-Animals, Health, andHuman Services–experienced increases incharitable giving between 2003 and 2004 andbetween 2000 and 2004, while two sectors,Education and Public Funding Organizations,experienced declines over these periods.

$172

$161$154

$172 $175

$0

$25

$50

$75

$100

$125

$150

$175

2000 2001 2002 2003 2004

Mil

lio

ns

Chart 1Total Direct Public Contributions to Bellwethers, 2000-2004

1 Inflation figures are based on the Consumer Price Index for the Northeast Urban area, as reported by the U.S. Department of Labor’s Bureau of Labor Statistics.

Increase54%

Decrease43%

No Change3%

Chart 2Bellwethers Reporting an Increase, Decrease or No Changein Total Direct Public Contributions Between 2003 and 2004

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99 Report Card on Charitable Giving in Erie County

3. Current fiscal and operational challenges were revealed in communications withbellwether CEOs in 2005.

Some bellwethers completing the survey in 2005 reported that lack of funding,personnel cuts and reorganizations made providing data for this year’s Report Cardmuch more difficult than in the past. Although such fiscal and operational challengesin 2005 are not revealed by data in this report for 2004, the current fiscal picture forarea bellwethers reflects and foreshadows troublesome times.

Substantive follow-up conversations with a representative group of bellwetherexecutives in the summer and fall of 2005 confirmed that while charitable givingoverall continued to rise slightly, it did not make up for increased nonprofit expensesand declines in government support.

4. In 2004 significantly more bellwethers had responded to trends in giving bytaking cost-cutting and revenue-enhancing measures, as compared to 2003.

Bellwethers responded much more proactively in 2004 compared to 2003 when 40percent of bellwethers reported not yet taking any cost-containment measures (orsaying that the survey question did not apply to them). In contrast, 98 percent ofbellwethers reported acting in 2004 to adapt to reduced levels of charitable givingand/or cutbacks in government funding.

Bellwether boards of directors were also more responsive in 2004, compared to 2003when nearly half had not taken any revenue-enhancing action to mitigate reducedlevels of giving. In 2004, all reporting board chairs indicated that their board hadresponded (or had plans to respond) to decreases in charitable giving and/or cutbacksin government funding. Bellwethers’ efforts to adapt to a fiscally strained environmentare discussed in more detail in Responses to Trends below (Section VI).

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11 00Report Card on Charitable Giving in Erie County

IV. 2004 Key F indings Consistent wi th Pr ior Yearsand Nat ional Trends

1. Giving levels reflect macroeconomicfactors.

Erie County charitable giving generallyreflects broader indicators ofmacroeconomic health. Since 2000, totaldirect public contributions closely followedchanges in the Dow Jones IndustrialAverage, albeit with less volatility (Chart 3).As the stock market has declined andrebounded, so too have total direct publiccontributions to Erie County bellwethers.

Since 2000, growth in consumer prices hasslightly outpaced growth in Erie County’sper capita income, implying scant newdiscretionary income available for increasedcharitable giving. Charitable givers notinvested in the stock market may have beenconstrained by consumer prices that grew more rapidly thantheir incomes. The modest growth in the past year in totaldirect public contributions to bellwethers reflects this trend.Additional downward pressure on charitable donationsstemmed from comparatively low local per capita incomes,which have consistently fallen below national averages forseveral decades (Chart 4).

2. Individuals remain the largest single source ofcharitable giving.

Consistent with past trends and national patterns, individualdonors—as opposed to businesses, foundations and othersources—were the largest single source of direct charitabledonations to nonprofits in Erie County. Gifts fromindividuals accounted for 53 percent of Erie Countybellwethers’ $174.8 million in total direct publiccontributions in 2004, a percentage similar to that of pastyears (Chart 5). Similar to last year, 43 percent ofbellwethers identified individual donations as theirfundraising priority over the next 12 months, while over halfof bellwethers planned to focus their fundraising efforts onother sources of donations.

Erie County U.S.

$11,887 $12,2241979

1989 $13,560 $14,420

$20, 3571999 $21,587

Chart 4Per Capita Income, U.S. and Erie County

Other

11%

Fundraising

Events2%

Individuals53%

Businesses19%

Foundations16%

Chart 5Distribution of Total Direct Public Contributions toBellwethers by Source, 2004

2000 2001 2002 2003 2004

75

80

85

90

95

100

105

110

115

Year End Dow Jones Industrial Average

Erie County Per Capita Income

Total Direct Public Contributions to Bellwethers

Consumer Price Index (Urban Northeast)

Chart 3Total Direct Public Contributions Compared to Economic Indicators(Base Year 2000 = 100)

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Donations from individuals in Erie County would account for aneven larger percentage of total direct public contributions if thisreport included donations to religious organizations, whichcome nearly exclusively from individuals (versus businesses andfoundations). According to national data, which include givingto religious organizations, individual donations (includingbequests) accounted for 84 percent of total donations in 2004.

Most individual donations come in small amounts. In ErieCounty, over 75 percent of the 337,000 individual donations in2004 were for an amount under $100 (Chart 6). Only 2 percentof individual contributions—just under 7,700 out of 337,000—exceeded $1,000.

3. Bellwethers in the Health and Educationsectors received the majority of total directpublic contributions.

Together, Health and Education bellwethersreceived half of total direct public contributionsin 2004. This is similar to the past years duringwhich these two sectors received between 50 and57 percent of total direct donations to ErieCounty bellwethers (Chart 7).2 Donations toHealth exceeded those to Education for the firsttime in 2004 primarily as a result of theconclusion of a major capital campaign by asingle Education bellwether, coupled with anincrease in giving to Erie County’s Health sector.

This trend is consistent with national patterns,which show Health and Education receivingamong the largest proportions of total directpublic contributions among these six sectors overthe five-year combined period from 2000 to 2004(Chart 8). The Human Services sector alsoreceived among the highest donations overallbetween 2000 and 2004 – 19 percent, the samelevel as Health. This is probably due to a spikein giving to Human Services after the September

11, 2001 terrorist attacks, as donations to Health exceeded those to Human Services in allother years since 2001.

$0

$10

$20

$30

$40

$50

$60

$70

Health Education Public FundingOrganizations

Human

Services

Arts & Culture Environment-Animals

Mil

lio

ns

2000 2001 2002 2003 2004

$46

$41

$32

$23$21

$12

11 11 Report Card on Charitable Giving in Erie County

Donation Size %Total No.

$0-100 77% 258,905

$101-1,000 21% 70,755

$1,001-10,000 2% 6,822

$10,001-100,000 <1% 740

$100,001 or more <1% 97

Total 100% 337,319

All Bellwethers

Chart 6Individual Donations by Size Category, 2004

Chart 7Total Direct Public Contributions to BellwetherSectors by Year, 2000-2004

2 Like those at the national level, several Health and Education bellwethers in Erie County are among the largest of the group of 60 nonprofits, not only in terms of charitable contributionsreceived but also in terms of employment, total revenues, payments for services provided and other factors.

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11 22Report Card on Charitable Giving in Erie County

4. Four of Erie County’s six bellwethersectors have experienced recent andlong-term increases in total directpublic contributions, consistent withnational trends.

Mirroring national trends, four of ErieCounty’s six bellwether sectors—Environment-Animals, Arts & Culture,Health, and Human Services—haveexperienced overall increases in totaldirect public contributions between 2000and 2004 and in the one-year period from2003 to 2004 (Chart 9).

While national and local trends havemoved in the same direction, themagnitude of change has been moredramatic locally, reflecting the greatervolatility across smaller numbers ofbellwethers and exceptionally good yearsfor several individual bellwethers.

Both nationally and in Erie County, theEnvironment-Animals sector saw thelargest single-year percentage gainbetween 2003 and 2004 and the largestlong-term percentage gain since 2000.Also seeing increases, although atsequentially lower levels of magnitude,were the Arts & Culture sector, Healthsector and Human Services sector. Interms of absolute dollars, the HealthSector experienced the largest dollar gainbetween 2000 and 2004, both nationally and in Erie County. At the same time, despiteapparent gains, national growth in giving to the Human Services sector has beennegative, after adjusting for inflation.

Increases experienced by some sectors in Erie County, particularly Environment-Animals and Health, were positively affected by giving to major capital campaignsconducted by bellwethers in these sectors. In 2004, for instance, capital donationsaccounted for two-thirds of total direct support to Environment-Animals and over one-third of total direct giving to Health. These percentages are significantly higher thanthose reported by Erie County’s other four sectors. In these sectors, contributions forcapital in 2004 ranged from a low of 1 percent of total donations to Public FundingOrganizations to a high of 20 percent of total direct donations to Education. Of course,some sectors depend more than others on generating capital, explaining some of thisvariation across the six sectors.

12% 10%

31%31%

7%

4%

19%22%

19%12%

12%21%

0%

20%

40%

60%

80%

100%

U.S. Erie County

Public Funding

Organizations

Human Services

Health

Environment-Animals

Education

Arts & Culture

Chart 8Distribution of Total Direct Public Contributionsby Sector, U.S. and Erie County, 2000-2004

2003-2004 2000-2004 Sector Erie County U.S. Erie County

Arts & Culture 38% 7% 44%

Environment -Animals 126% 7% 247%

Health 17% 5% 37%

Human Services 6% 2% 24%

U.S.

22%

24%

17%

7%

Chart 9Change in Total Direct Public Contributions bySector, U.S. and Erie County

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11 33 Report Card on Charitable Giving in Erie County

V. 2004 F indings Di f fer ing f rom Pr ior Yearsand Nat ional Trends

1. Unlike national trends, giving patternsby source were mixed with only individualdonations registering absolute increasesin 2004.

Charitable giving from foundations andbusinesses to Erie County bellwethers trendeddownward in 2004 after sharp rises in 2003(Chart 10). Greatest in magnitude was the 22-percent decline in foundation giving from 2003to 2004, although longer term foundationgiving remained up 21 percent since 2000.Business donations saw a small 1 percentdecrease, and therefore nearly sustained therecord high levels of giving reported for thissource for 2003. Donations generated throughfundraising events declined by 25 percent,continuing a steady descent since 2000.Donations from individuals, up 10.3 percent (or$8.6 million) from 2003, supported the overallincrease in total direct public contributions tobellwethers in 2004.

These patterns differ somewhat from national trends showing increased giving from allcharitable sources in both the short term and long term (Chart 11).

2. Nonetheless, giving from foundations andbusinesses in this region increasedsignificantly over the long term andaccounted for proportionally more of totalpublic contributions than did foundations andbusinesses nationwide.

Charitable giving from local businesses andfoundations surged 46 percent between 2000and 2004, compared to the 16 percent gainreported nationwide. In 2000, giving from local

businesses and foundations accounted for about one-quarter of total donations,compared to 35 percent of total public contributions to Erie County bellwethers in 2004.In contrast, Giving USA reports that foundations and businesses accounted for 16percent of total direct public contributions nationwide in 2004.

The larger reliance upon individual donors nationally—76 percent of total donations in2004, rising to 84 percent including bequests—reflects, in part, donations to religion,which account for about one-third of total giving across the nation and come nearlyexclusively from individuals. Such donations are not accounted for in the Report Card.

$0

$20

$40

$60

$80

$100

Individuals Businesses Foundations Fundraising Events

Mil

lio

ns

2000 2001 2002 2003 2004

$92

$33

$27

$3+75% +21%

{

Chart 10Total Direct Public Contributions to Bellwethers by Source,2000-2004

2003-2004 2000-2004 Source Erie County U.S. Erie County

Individuals 10% 4% 8%

Businesses -1% 7% 75%

Foundations -22% 7% 21%

U.S.

8%

12%

17%

Fundraising Events -25% N/A -39% N/A

Chart 11Change in Total Direct Public Contributions by Source, U.S.and Erie County

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11 44Report Card on Charitable Giving in Erie County

However, these figures are consistent withlonger term trends. For the five year combinedperiod between 2000 and 2004, donations fromErie County’s businesses and foundationsaccounted for 30 percent of total donations tobellwethers (Chart 12). Across the nation,giving by businesses and foundationsaccounted for 16 percent over the same five-year combined period.

3. Bequest gifts to Erie County bellwethers,up slightly between 2003 and 2004, weredown significantly between 2000 and 2004, incontrast to stable national levels.

As a subset of individual gifts, bequest gifts,which are received upon the death of donorswho have named an organization in their will,rose a slight 2 percent from 2003-04, offsettinglittle of the longer-term decline of 29 percentbetween 2000 and 2004 (Chart 13). This patterncontrasts with national patterns which showbequest gift levels rising a robust 9 percentbetween 2003 and 2004 and completing arecovery to 2000 levels (Chart 14).

Without additional data, it is difficult tointerpret Erie County’s trends and differencesfrom the national pattern. Local bellwethersappear to be placing less emphasis uponplanned giving than their national counterparts.This year’s data revealed that only 5 percent ofbellwethers report planned giving as their topfundraising priority over the next 12 months.This may suggest that few bellwethers aretargeting bequests and planned giving as a topfundraising priority. It further suggests thatbellwethers have not aggressively pursuedplanned giving as a long-term strategy forsustaining the local nonprofit sector into thefuture. 3

50%

84%

14%

5%

16%

11%18%

0%

2%

0%

0%

20%

40%

60%

80%

100%

Erie County U.S.

Individuals

Businesses

Foundations

Fundraising Events

Other

(includes bequests)

Chart 12Distribution of Total Direct Public Contributions by Source, ErieCounty and U.S., 2000-2004

$0

$5

$10

$15

$20

$25

2000 2001 2002 2003 2004

Mil

lio

ns

$21.2

$11.6

$17.0

$14.7 $15.0

Chart 13Bequest Gifts, 2000-2004

2003-2004 2000-2004 Source Erie County U.S. Erie County

Bequests 2% 9% -29%

U.S.

0%

Chart 14Change in Total Bequest Gifts, U.S. and Erie County

3 While it is possible that many bellwethers have made bequests and/or planned giving a priority, only 5 percent selected it on the survey as their organization’s single top fundraisingpriority over the next 12 months.

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11 55 Report Card on Charitable Giving in Erie County

4. Inconsistent with national trends, two of Erie County’s six bellwether sectorsexperienced both short-term and long-term declines in total direct publiccontributions.

Total direct public contributions to Education and Public Funding Organizations in ErieCounty continued to slip from 2003 to 2004, intensifying long-term declines of 30percent and 27 percent, respectively, since 2000 (Chart 15).

Although these one-year declines—down $13.3 million for Education and$4.4 million for Public FundingOrganizations—reflect in part theconclusion of a major capitalcampaign by one large Educationbellwether and a change in reportingof donations by one large PublicFunding Organization, the trendremains contrary to the nationalpicture, which recorded modestincreases for both sectors.

Giving USA notes that the overall increase to the Education sector nationally reflects amix of declines in alumni giving participation rates coupled with more than offsettingincreases in the average dollar gift amount per alumnus.

The decrease reported by Erie County's Public Funding Organizations reflects in partan intentional strategy of the United Way of Buffalo & Erie County to emphasizeundesignated giving (or Community Care) resulting in a reduction in designatedgiving. The decline also reflects that certain large corporate campaigns are nowprocessed on a national basis, resulting in financial reporting containing only thosecontributions directed toward our local community.

2003-2004 2000-2004 Sector Erie County U.S. Erie County

-25% 5% -30%Education

Public Funding Organizations -12% 7% -27%

U.S.

7%

12%

Chart 15Change in Total Direct Public Contributions by Sector, U.S. and Erie County

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11 66Report Card on Charitable Giving in Erie County

1. Cutbacks in government funding have had varied impacts on client populations.

Among the 43 bellwethers that reported receiving government funding in 2003and/or 2004, 23, or slightly more than half, reported declines, while 20 reportedincreases, with the percentage of bellwethersreporting decreases being highest in theEducation and Public Funding Organizationssectors. It is therefore not surprising that half ofbellwethers reported an impact on clientpopulations from declines in governmentfunding (Chart 16).

Bellwethers cited client impacts ranging fromreductions in the number of clients receivingservices (27 percent of bellwethers reporting),higher fees (15 percent) and longer waitingtimes (10 percent). Half of the bellwethersreported that the question was not applicable orthat cutbacks in government funding had noimpact on client populations. The size of thislatter group of bellwethers could be overstated ifbellwethers did not have in place the systemsnecessary to document, track and monitorimpacts of government funding cutbacks.

2. Bellwethers pursued a multi-prongedapproach in adapting to reduced levels ofcharitable giving and/or cutbacks ingovernment funding.

Bellwethers took multiple actions in 2004 toraise revenues and reduce expenditures inresponse to fiscal conditions and giving trends.

To raise revenues, more than half of bellwetherCEOs reported stepping up fundraising efforts,while nearly one-quarter increased fees (Chart 17).

To lower expenditures, over one-third ofbellwether CEOs reported laying off workersand relying more on volunteers. Almost one-third reduced or cut program services. Asomewhat more popular response, reported by 41 percent of bellwethers, was to pursuemore cross-sector or cross-organization collaborations.

50%

15%13%

10%

27%

0%

10%

20%

30%

40%

50%

NA/No impact Fewer clientsreceiving services

Higher fees Other Longer waits

Chart 16Impacts of Declines in Government Funding on ClientPopulations, 2004

56%

41%37%

34% 32%

27%24%

10%

2%

0%

20%

40%

60%

Increased

fundraising

efforts

More

collaboration

Layoffs Greater

reliance

on

volunteers

Fewer

program

services

Not

applicable

Higher

fees

Other No

actions

taken

Chart 17Responses to Reduced Levels of Charitable Giving and/orCutbacks in Government Funding, 2004

V I . Responses to Trends

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11 77 Report Card on Charitable Giving in Erie County

The most common form of collaborationinvolved program services and facilities,followed by marketing, administration andfundraising (Chart 18). Only 15 percent ofbellwether CEOs reported taking nocollaborative actions to reduce costs, increaserevenues and/or improve service delivery.

At least half of participating board chairs citedthe development of fundraising strategies,community engagement, greater collaborationand increased financial support by the boardas ways in which their board responded (orplanned to respond) in 2004 to decreases incharitable giving and/or cutbacks ingovernment funding.

Bellwethers responded more proactively in 2004 compared to 2003 when 40 percent ofbellwether CEOs reported not yet taking any cost containment measure (or reportingthat the survey question did not apply to them). Only 2 percent reported taking noaction in 2004. The percentage of bellwethers reporting increased reliance onvolunteers increased 12 percentage points, from 22 percent in 2003 to 34 percent in2004. The proportion of bellwethers reporting participation in more collaborationsincreased 10 percentage points, from 31 percent in 2003 to 41 percent in 2004. Morebellwethers reported layoffs (37 percent in 2004 compared to 30 percent in 2003) as wellas fewer program services (32 percent in 2004 compared to 27 percent in 2003).

Bellwether board chairs also responded (or had plans to respond) in greater numbersin 2004, compared to 2003 when nearly half indicated that no revenue enhancing

measures had been taken by theboard. In 2004, not one reportingboard chair indicated that no actionshad been taken (or were planned forthe future). Seventy-one percent saidtheir board had responded (or hadplans to respond) by developing newfundraising strategies, up from 37percent in 2003. At the same time, 45percent reported increased financialsupport by the board, up from 16percent in 2003.

3. Bellwethers most frequentlyselected gifts from individuals as thesource of funding that helpedcompensate for declines ingovernment funding.

The most common sources of higher funding levels, which helped compensate fordeclines in government funding, were gifts from individuals, reported by 35 percent ofbellwethers (Chart 19).

0%

10%

20%

30%

40%

50%

60%

Program

services

Facilities Marketing Administration Fundraising No

collaborative

actions taken

Other

51%

42%

32%29%

24%

15%

10%

Chart 18Areas of Collaboration With Other Organizations, 2004

35% 35%

24%

17%15% 15%

13%11% 11%

4%2%

0%0%

20%

40%

Indiv

iduals

None

Foundati

ons

Volu

nteer h

ours

Corpora

tions

Earned re

venues

Fundra

isin

g eve

nts

Fed/s

tate

/city g

overn

ment g

rants

Oth

er

Gift

s in k

ind

Gove

rnm

ental c

ontract

reve

nue

Mult

i-purp

ose appeals

Chart 19Sources of Higher Funding Levels, 2004

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11 88Report Card on Charitable Giving in Erie County

Bellwethers also drew upon greaterfoundation and corporate support with 24and 15 percent of bellwethers, respectively,reporting higher funding levels from thesesources. Other responses were additionalvolunteer hours (cited by 17 percent ofbellwethers), increases in earned revenuesthrough new memberships and ticket sales(15 percent), and increasing revenues fromfundraising events (13 percent).

4. When asked to identify theirorganization’s single fundraising priorityover the next 12 months, bellwethers mostfrequently reported individual donations astheir top priority.

Consistent with these responses, 43 percentof bellwether executives and about the samepercentage of board chairs reported that gifts from individuals would be their fundraisingpriority over the next 12 months (Chart 20).

The priority focus on individuals is consistent with that for 2003 and far outpaces thepriority focus on businesses (15 percent of bellwethers), capital campaigns (15 percent) orfoundations (7 percent). Whether the individual donor market has the capacity to fill thegap is uncertain.

43%

15% 15%

7% 7%5% 5%

3%

0%

10%

20%

30%

40%

50%

Indiv

iduals

Businesses

Capital C

ampaig

n

Foundati

ons

Oth

er

Endowm

ent

Bequests/P

lanned G

ivin

g

Special E

vents

Chart 20Bellwether Fundraising Priorities Over Next 12 Months

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A casual reader of this year’s Report Card on Charitable Giving might think that our local nonprofit community is

experiencing a rebound after weathering a few lean years. Indeed, a cursory glance at the data suggests that.

Left with that impression, we might simply brush ourselves off, blink at the bright sun peeking over the horizon,

and continue with business as usual. A deeper read of the data, however, brings us inevitably to the conclusion

that we are in the tall weeds, and, unless we take quick and decisive action, in the tall weeds we shall remain.

For the past four years, these report cards have surveyed and analyzed the state of charitable giving in Erie

County. The intent from the beginning was not only to present a snapshot of a given year’s giving levels, but

more importantly to develop an understanding of trends. The purpose? So that together we can work as a

community to develop an agenda to address the ramifications of the trends we have been able to identify.

It’s important to define the term “we” as it is used in this section of the report. As we see it, there are four levels

of “we” who must both pay attention to and act on the very serious issues raised in this document:

• The individual agencies (both boards and staff)

• The six nonprofit sectors

• The entire nonprofit community, and

• The broader community as a whole

There is much that can be done to address our current situation, and all of us can play a role. What follows are

some key questions posed to spur dialogue and action at each of the levels laid out above.

Individual Agencies

Each Sector

How might we …

11 99 Report Card on Charitable Giving in Erie County

VI I . For the Future

Expand on the recent successes in reducing operating costs within agencies, recognizing thatsecuring operating funds continues to be a challenge?

Identify potential partners and/or collaborators in a systematic way?

Ensure that boards of directors understand they represent not only the organizations theylead but also the community at large?

How might we …Create ongoing networks among agencies to foster opportunities for collaboration and sharing?

Engage sector-specific funders in shaping a vision for the sector and their role in it?

Develop a standardized “state-of-the-sector” position statement to educate the broader community onthe current conditions facing the sector as well as the sector’s recent achievements, impacts (includingfiscal), opportunities and challenges?

Foster an environment where program expertise is leveraged?

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22 00Report Card on Charitable Giving in Erie County

The Nonprofit Community

The Broader Community

These are some of the thought-provoking questions. You may have additions. Some of the questions may make

us uncomfortable. However, our responses, at every level of “we,” will spell out the difference between creating

our future and simply letting it happen to us.

Clearly, the current climate is daunting. While there is much work to be done, this Report Card gives evidence

that the will and capacity to do things differently exists.

We look forward to continuing our dialogue about this report’s findings and responding effectively to its

implications. Thank you.

How might we …Determine an appropriate and sustainable size for the nonprofit community as a whole?

Create an environment where affinities are sought for innovative program concepts within existing agenciesbefore creating new agencies to implement them?

Engage the broader community in supporting the nonprofit sector into the future through bequest andplanned giving?

Advocate for fair and just allocation of government dollars to work in all sectors in concert with the broadercommunity?

How might we …Awaken the community to the gravity of the threats to the long-term viability of the nonprofit sector?

Define a new partnership with the media to educate people about the concerns and challenges faced bynonprofit agencies and consumers of the services they provide?

Participate in the development of an agenda for change?

Advocate for and ensure the implementation of that agenda?

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